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What Petco Park Can Teach Us About a New Chargers Stadium

Any public investment in a facility designed to accommodate a profit-making enterprise — like the Padres or the Chargers — must have the public’s benefit as its primary objective.

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Tom Shepard on Feb 20, 2014

Any discussion about building a new Chargers stadium must eventually refer to the decision by San Diego voters in 1998 to build what is now Petco Park. For perspective, let’s review how that proposal came about.

In 1995, then-Mayor Susan Golding and the City Council agreed to expand and close off Jack Murphy Stadium to provide the additional seating and amenities the Chargers had requested. The team also gained control over all advertising revenue at the stadium.

But Padres owners John Moores and Larry Lucchino claimed the Chargers’ new agreement made it financially unfeasible for the baseball team to continue using the stadium after its lease expired in 1999.

So Moores and Lucchino asked Golding to appoint a citizens task force to validate their claim, and agreed to open their books as part of a review process. After consulting with a variety of experts and reviewing the Padres’ financial statements, the task force confirmed that the Padres’ continued use of what had become Qualcomm Stadium was no longer viable.

Golding appointed a second citizens task force to recommend a location and financing plan for a new baseball-only facility. This involved several public hearings and sparked a spirited citywide debate. Moores wanted the ballpark to be adjacent to the bayfront along Harbor Drive; Lucchino preferred a Mission Valley site.

But Golding argued a public investment in such a facility could only be justified if it provided significant public benefits. She recommended a site in the blighted warehouse district now known as the East Village, where the ballpark could provide a catalyst for revitalization and private investment.

I had been hired by the Padres in anticipation of a public vote on whatever plan the City Council eventually approved. Our internal public opinion polls showed limited support for a publicly financed ballpark by itself, but strong support for public investment in a project that would revitalize East Village and complete the city’s downtown redevelopment efforts, which had historically enjoyed broad support from San Diego voters.

The Padres owners embraced the task force and mayor’s recommendations. The team owners negotiated an agreement that required a significant investment from the team — not only in the ballpark, but in private development of the surrounding neighborhood. The agreement made them responsible for all of the project’s cost overruns.

All told, land acquisition and construction for Petco Park cost $456.8 million: $225 million financed with municipal bonds repaid by hotel taxes; $57.8 million from redevelopment funds generated within the project area; $21 million from the Port of San Diego and $153 million from the Padres (not including their substantial investment in private development projects in East Village).

That agreement went before San Diego voters in November 1998, and was approved by 60 percent of voters. A series of lawsuits delayed construction, but Petco Park eventually opened in April 2004. Since then, public investment in it has spurred more than $2 billion in private investment, generating hundreds of millions of dollars in new tax revenues and transforming East Village into one of San Diego’s most exciting and vibrant neighborhoods.

Much has changed since 1998, including the demise of redevelopment in California, the Great Recession and a growing skepticism about the city’s ability to manage its finances.

But the underlying principles that guided that decision have stayed the same. Any public investment in a facility designed to accommodate a profit-making enterprise — like the Padres or the Chargers — must have the public’s benefit as its primary objective. Given the city’s still-tenuous finances, that benefit must include a positive impact on city finances.

Most discussions about a new Chargers football stadium have started with the premise that the team will leave if it doesn’t get a new stadium. Although diehard Chargers fans may consider this enough reason for public investment, I don’t believe a majority of San Diego voters will.

Instead, the team and city need to involve the public by creating a plan through a transparent, public process. And the plan’s primary objective has to be maximizing the stadium’s benefits for the city and its taxpayers.

The ultimate solution would include a multi-use complex (stadium, arena and other entertainment venues) that would attract non-football events, not to mention attendees, 200-plus days a year.

It would provide the foundation for a new privately financed entertainment district. Whatever part of the city this ends up in could see the same surge of activity and development East Village did as a result of the Padres’ investment — if we play our cards right.

Tom Shepard is a San Diego-based political consultant. Shepard’s commentaryhas been edited for style and clarity. See anything in there we should fact check? Tell us what to check out here.